This is an important, recent decision from the Supreme Court of the State of Washington, its highest court, involving a personal injury situation arising from a homeowner’s claim. The name of the case is Xia v. Probuilders Specialty Insurance Company, which was decided in April of this year.
The case involved a woman who bought a townhouse. She became gravely ill after moving in: the manner in which the water heater was installed in her home was causing a release of carbon monoxide.
Mrs. Xia notified the townhouse management company, which was responsible for the negligent installation of the water heater. The management company notified their insurance company under their liability policy. The insurance company said that Mrs. Xia’s claim was not covered because of a pollution exclusion in the policy. They denied having any duty to cover her claim.
Well, the Supreme Court of the State of Washington said, hey, insurance company. You are not looking at this claim the right way. While carbon monoxide may be a pollutant under the policy, you have to look at the cause of the loss, and the cause of the loss was the negligent installation of a hot water heater. The fact that the negligent installation caused the release of a pollutant that’s otherwise not covered does not change the fact that the negligent installation of the water heater was covered under the policy.
Rather than summary judgment being granted to the insurance company, the highest court of the State of Washington granted summary judgment on liability for the loss to Xia and deemed that the townhouse company was negligent in installing the hot water heater. The Court also sent the case back for a trial on both compensatory damages and damages for bad faith denial of the claim.
So, the insurance company’s determination to rely on this exclusion, even though the exclusion was arguably applicable to the loss, can still be found by a jury to be bad faith. This is a lesson in understanding how insurance policies can be read certain ways to create coverage, where insurance companies think the coverage does not exist.
The Supreme Court of the State of Washington certainly thought coverage existed, in spite of the fact that the pollutant that caused the injuries to Mrs. Xia was excluded under the pollution exclusion. This will be a very costly misinterpretation for this insurance company and an important lesson for all insureds and insurance companies in Washington State.
Please contact us with any questions or comments.
Evan S. Schwartz
Founder of Schwartz Law
We as a society are not prepared to deal with catastrophic illness, and although I was smart enough to have taken out a Long-term Disability policy in my thirties, the
Desperate and devastated with everything to lose, I put my life in the hands of Evan and Michail on faith. In my heart I always believed they would deliver, and
During the most trying part of my life, Schwartz Law’s attorneys were fighting for my life. I was physically just barely up on my own two feet, with a diagnosis
A company made an error in how they sold me my long-term disability insurance policy and they offered me a lump sum settlement. I did not fully understand the offer
My claim was denied by my insurance company. My medical condition wasn’t understood by my physicians. My first attorney gave me terrible advice. My family faced financial ruin without the
The Chanin Building, 122 East 42nd Street, Suite 725, New York, New York 10168
Toll Free: (800) 745-1755
Phone: (212) 608-5445
666 Old Country Road, Ninth Floor, Garden City, New York 11530
Toll Free: (800) 745-1755
Phone: (516) 745-1122
Fax: (516) 745-0844